In the aftermath of the UK’s vote to leave the European Union the world’s markets have been sent into turmoil. It is only to be expected that uncertainty will drive short term volatility but now that the jigsaw pieces have been well and truly thrown up in the air does this actually offer new trading opportunities to the UK and the world?
The UK has always been one of the great trading nations in both goods and services. It has developed many insights, skills and partnerships over the centuries and has a reputation for innovation. How can those resources be called upon to help the UK and the world face the post-Brexit era and even benefit from it?
Old friends, new opportunities?
Prior to the UK joining the European Community in 1973, The Commonwealth countries had provided the UK’s largest trading bloc. At The Commonwealth’s inception in the late 1940s both import and export levels between the UK and The Commonwealth were close to 40% of the UK’s total trade. By 1973 both imports and exports were down to around 18%. This century these have fallen to between 8 and 10% of the total, offering a big opportunity for growth.
Source: House of Commons Library: UK – Commonwealth trade statistics note SNEP6497
A UK free to negotiate its own trade deals and hungry to grow markets outside the EU should see the UK refocus on its old trading partners, with great potential for both sides.
What’s in it for The Commonwealth?
Today the UK is one of the world’s largest importers. Its size means it can sustain an increased flow of goods from The Commonwealth in exchange for the goods and services that a UK economy with a renewed global outlook can provide.
Since 1973 the position of many Commonwealth countries has changed out of all recognition. In early 2016 India overtook China as the world’s fastest growing economy. Several African member states now feature in the list of the top 30 fastest growing economies with growth over 5%.
There is a fit and synergy across The Commonwealth as a global trading network with a common history of language, legal frameworks and ways of working. For example, India has the people to become the manufacturing hub of the world and the ‘Make in India’ initiative, strategic plan and political will to do this. As an economy it requires financial services and natural resources. The UK can provide the finance with London the leading global financial centre. Commonwealth member Singapore already invests heavily into India. Africa, Australia and Canada have the natural resources that are required by growing manufacturing nations.
Making this happen to enable growth
In the last 20 years the Internet has provided new ways to connect nations to do business online. A community of nations primarily doing business in the English language provides greater eCommerce opportunities for the UK and The Commonwealth nations than an EU uneasily shackled by common regulations, the Euro, and many different languages.
In addition, over the years there have been a number of attempts at creating a Commonwealth Free Trade Zone, however the climate was not right at the time. As we know, things have changed quickly and the UK and India especially have political drivers that make this very attractive to revisit.
The UK now has an imperative to quickly find alternatives to the EU market, prior to starting negotiations on a new relationship. In the medium term the UK could emerge as a bridge between the Commonwealth and the EU which would benefit all parties. Everyone needs to move quickly and protect and even grow the global economy, seeing the opportunities provided by recent changes to act as a catalyst for growth in a changed world.